Testimony to the Maryland House Economic Matters Committee on HB 1366

EPI Research Associate Ron Hira delivered the following testimony before the Maryland House Economic Matters Committee on Monday, March 6, 2017.

I want to thank Delegate Fisher for inviting me to testify today about House Bill 1366. My name is Ronil Hira and I am an associate professor of public policy at Howard University in Washington D.C., a research associate with the Economic Policy Institute of Washington D.C., and a resident of Laurel, MD. I have been studying high-skilled immigration and guestworker programs, such as the H-1B and L-1 visa programs, for more than fifteen years. I have testified before the U.S. Congress multiple times about the programs.

I would also like to note that my parents, now both expired, were immigrants from India. It is both a professional and personal honor to testify today.

I. The Intent of Our Immigration Law is to Protect American Workers – Instead Our H-1B & L-1 Guestworker Programs Inflict Serious Harm on Them

The goals of the H-1B and L-1 programs are laudable. They are intended to allow employers to import specialized foreign workers when U.S. workers are not available. Employers are supposed to turn to these guestworkers only when there’s a shortage of U.S. workers. According to the Labor Department, the H-1B is supposed to “help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce.”

However laudable the aspirations of the programs may be, massive loopholes enable any company to legally use the programs to import cheaper workers to substitute for U.S. workers. Contrary to widespread misconceptions, employers do not have to recruit American workers before hiring an H-1B or L-1 worker. There is widespread misuse and abuse of both programs, including right here in Maryland. The programs are harming Maryland workers and students. We have overwhelming evidence that many employers hire H-1B and L-1 visa workers not because they have specialized skills in short supply in the U.S., but instead because the H-1B and L-1 workers are much cheaper than Americans. The wage rules for the H-1B program are written such that it is extraordinarily easy to pay an H-1B less than equivalent American worker. My analysis of real cases shows H-1B workers are as much as 40% cheaper than the American workers they replace. The L-1 visa program has no wage rules, as a result L-1 workers are often paid home-country wages. The majority of L-1 workers come from India, where home-country wages for technology professionals range from $6,000 to $20,000 per year.

Two years ago, the San Jose Mercury News reported that publicly traded firm Electronics for Imaging paid its L-1 visa workers $1.21 per hour. That’s not a typo. They paid them a little more than a buck an hour. What’s remarkable about the story though is that the company did not run afoul of U.S. government rules governing L-1 visas – the $1.21 per hour was perfectly acceptable to the U.S. government. Instead, the company was found to be in violation of California state minimum wage laws. Countless other cases of exploitation are undoubtedly never detected.

The majority of H-1B and L-1B visas go to fill IT-related jobs. But contrary to popular belief, most of these visa holders generally don’t do cutting-edge software engineering. Instead, most perform back-office programming for banks and insurance companies. These are good-paying jobs that provide a solid middle-class standard of living, paying on average $91,270 in Maryland, and there is no shortage of Americans to fill these jobs.

Indeed, many Americans were doing these jobs — at places like Walt Disney Co., Fossil Group, Southern California Edison, Toys “R” Us, New York Life, Northeast Utilities, Harley Davidson, Xerox, HCSC, Emblem Health, Abbott Labs, University of California, and PG&E — before they were ordered to train their H-1B and L-1 guestworker replacements.Hiring H-1B & L-1 workers because they are cheaper than Americans is a routine and mainstream practice. The press has shed light on those scandals but this is only the proverbial tip of the iceberg. There are many more unreported cases. I have been contacted by dozens American workers who are currently training their replacements. Most have had to sign non-disclosure agreements as a condition of severance. To put this in plain-spoken terms, your fellow U.S. workers are being forced to train their guestworker replacements but can’t speak publicly about it because they had to sign gagorders. This means the full extent of H-1B and L-1 abuse never comes to light.HB 1366 would change this by giving voice to American workers who are being denied one.

For jobs located in Maryland, the top employers with approved Labor Condition Applications (the first step in obtaining government approval to hire an H-1B worker) include mostly IT outsourcing firms including: Cognizant, Deloitte Consulting, Mindtree Limited, PriceWaterhouse Coopers, Wipro, Accenture, Mastech, HCL, Birlasoft, Tata Consultancy Services, and Infosys. You’ve probably never heard of many of these firms. They specialize in IT offshore outsourcing, leveraging cheap H-1B workers in order to ship Maryland jobs overseas to low-cost countries like India. They are overwhelmingly bringing in “Computer Systems Analysts” and “Computer Programmers” on the H-1B program presumably to do back-office IT work. This is the kind of work that Marylanders can do.

Cognizant alone received approval for 2,051 positions located in Maryland in 2016. That’s four times the next highest recipient. If you don’t know Cognizant, it is the firm that infamously replaced Disney and Emblem Health workers with cheaper H-1Bs. Virtually all 2,051 of these jobs can, and should, be done by Americans or lawful permanent residents. In fact, some of those jobs were surely being done by Marylanders. HB 1366 would make this kind of information available to everyone. Think about it. As legislators were you aware how the H-1B program is being used in Maryland? My guess is no. But you should.

II. The Benefits of HB 1366 Overwhelmingly Outweigh Any Costs

As legislators you are faced with assessing the costs and benefits of any bill and how it impacts various interests. The legislation’s benefits far outweigh any costs it may impose. And the bill will benefit Maryland’s students, educators, workers, employers, and policymakers. A few special interest groups may object to transparency, but given how these programs have been abused they shouldn’t be allow to operate behind closed doors. Transparency is a touchstone of good government.

This simple and straightforward bill will benefit Marylanders in many ways.

Students and educators will be able to see where employers believe skills gaps exist – which occupations are in high demand. The bill will ensure that this critical labor market signal is conveyed to students who can then specialize in those fields. Similarly, educators and educational institutions can redirect resources to training students for those fields.

Maryland workers can benefit in multiple ways. They can see potential job opportunities and also places where large influxes of H-1B and L-1 workers might threaten their positions. Employers abusing the H-1B and L-1 programs may be more reluctant to game the system thus saving many workers from being replaced by H-1Bs and/or having those jobs shipped overseas. Shortly after the Disney-Cognizant H-1B replacement story landed on the front page of the New York Times, enough public pressure was exerted on Disney to reverse its decision to outsource jobs at its ABC News division in New York City. Yes, public disclosure can modify the questionable behavior of businesses, and in this case saved 35 American jobs.

Maryland policymakers and government officials can identify areas (geographical, occupational, and skills) where there is heavy reliance on foreign workers. Resources can be better allocated to reduce reliance on foreign workers. Further, policymakers can identify the companies heavily reliant on foreign workers. This information can be used to help connect employers with Maryland government resources to reduce their need for foreign workers.

Maryland officials can avoid possible embarrassment should state and local government contracts be filled by firms that game the H-1B and L-1 programs in order to offshore the work. Politico reported last year about dozens of “guestworkers toiling at the U.S. Department of Labor.” The University of California, a major state university system, recently outsourced about 100 of its IT staff positions to HCL, a major India-based outsourcer. HCL had the UC workers train H-1B replacements and shipped a significant number of those jobs to India. One of MD’s top H-1B applicants is HCL. Do Maryland officials know if any of government work is being offshored?

Employers and entrepreneurs who use the programs as intended will also reap real benefits. Employers who use the program to fill genuine skills gaps or to hire individual worker who are truly specialized skills will have access to more visas as the firms misusing it reduce their usage. Further, the newly available data can be used to more effectively educate policymakers about where to redirect government education and training resources. An individual entrepreneur will be able to see patterns in skills gaps and can more forcefully conveyed to policymakers the need for action.

The costs of the bill are “minimal” in the words of the Maryland Department of Legislative Services. Employers already collect and provide information about their H-1B and L-1 workers to the U.S. Government. The effort required to simply report the number of H-1B and L-1 guestworkers to the Maryland government is de minimis. The federal government requires some disclosure of the H-1B usage but no disclosure of the L-1 program. This legislation would shine a light on how the program is being used in Maryland. It would not be duplicative.

Exploitation of the H-1B and L-1 visa programs is a multi-billion dollar business and the groups profiting from it prefer to keep it in the dark.

It is worth noting that immigration lawyers earn money when H-1B and L-1 visa workers are hired but get nothing when U.S. citizens or permanent residents are hired.

III. Maryland Can Lead Where Congress Has Failed To Act

The link between H-1B abuse and offshoring has been well understood for more than a decade. Newspapers with editorial boards that span the ideological spectrum—the New York Times, Tampa Bay Times, Boston Herald, Buffalo News, New York Daily News, New Jersey Star Ledger, Los Angeles Times, and the Washington Times—have called for fixing the H-1B program. There is no good reason that the U.S. government—but especially Congress—can’t act to fix the program.

This is not a partisan issue. Republican Senator Charles Grassley has co-sponsored legislation with Democratic Senator Richard Durbin for each of the last five Congresses to fix the broken H-1B and L-1 visa programs. Just last week, U.S. House Democrats Pascrell and Khanna introduced legislation with Republicans Brat and Gosar that is a companion to the Grassley-Durbin bill. But they’re not alone. Others have sponsored or co-sponsored H-1B and L-1 visa reform including Republican Senators Sessions (now Attorney General), Cruz and Democratic Senators Brown, Nelson, Blumenthal, and Sanders.

But we can’t wait for the possibility for Congress to act. Congress has known about flaws in these programs for more than a decade yet it is failed to act. American workers are right to conclude they have not only been forgotten, but also betrayed, by their government. HB 1366 takes an important step towards righting this wrong. Maryland can lead the way towards good government and restoring the integrity in, and confidence in, these important programs.

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